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Increasing life insurance policies

Life policies which have a fixed benefit will over a period of time devalue as the effect of inflation kicks in.   To combat this life offices have been offering more and more policies which provide provisions to increase the sum insured.

There are three basic types of provision.

Unit linked life insurance policies

Some lie offices offer unit liked income protection insurance polices. These are non qualifying life insurance policies. After an initial non allocation period the premiums purchase units in the selected fund. Each month the appropriate numbers of units are cancelled in order to pay for that months cover.   The policy is reviewed after five years to see if the unit values and growth is sufficient to cover future cost assumptions. If the units have over performed then there would be a cash value built up which could be used as a surrender value.   Some offices will pay out the unit value on death before expiry.

Some offices offer a no claims bonus at expiry.
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